Peoples Bancorp of North Carolina (PEBK)

Alright, ENBP was one for me, and here is one for the (3) readers of this burgeoning blog.

Peoples Bancorp of North Carolina (PEBK) of Newton, NC. PEBK operates as….wait for it….Peoples Bank.

elbow

Peoples Bank currently operates 19 banking offices, mainly northwest of Charlotte (Catawba, Alexander, Lincoln, Mecklenburg, & Iredell counties) and they are focused on growing its Wake county (Raleigh MSA) presence.

The weakness in bank stocks and the broader market has PEBK shares down ~20% since its 2018 highs. While PEBK’s P/E and P/TBV valuations have not retreated all the way back to pre-election levels, current valuation (13.7x P/E and 137% P/TBV) on PEBK shares are back at early 2017 levels and provide a good entry point to start accumulating a position in an attractive banking franchise.

PEBK has proven its mettle over the years. The bank was established in 1912 and all of the growth over the past 106 years has been organic, growing from the initial branch to its current 19 branch and 2 loan production locations. PEBK managed through the previous financial crisis without printing a full year net loss and PEBK has been printing some healthy returns since FY 2014. As positioned today, 1%+ ROA and 10%+ ROE profile is a reasonable forecast for returns during expansionary periods. PEBK shares have traded publicly for a long time, and just about any long-term cycle has management compounding equity returns at a 9%+ annualized rate.

Primary drivers setting up PEBK shareholders for continued investment performance over the near- and longer-term:

  1. Compounding Earnings: PEBK has proven over and over that banking done well is a good business. Under the current regulatory environment, ROE should continue to compound at a 10% rate and provide attractive growth and investment returns to shareholders. Peoples Bank has a wonderful geographic footprint with plenty of opportunity to leverage its franchise into new/adjacent markets. With a 14bps Cost of Funds, PEBK management has a very valuable funding source to drive attractive investment returns for shareholders.
  2. Dividend Income: PEBK pays a current dividend yield of ~1.9% and the current payout ratio is very manageable 26%.
  3. Potential M&A Upside: from an acquirer’s perspective, PEBK checks off just about every box on a Bank M&A wish list:
    • Market Geography: PEBK is positioned nicely in/around major markets in North Carolina, which has been an attractive market for both in-state and out-of-state buyers for several years now.
    • Deposit Funding: PEBK’s deposit position is as close to as good as it gets in 2018. Nearly 37% of its deposits are noninterest-bearing, which is great. But even better than the noninterest deposits is the fact that the interest-rate on its interest-bearing deposits IS ONLY 20bps! That is a phenomenal and incredibly valuable deposit franchise. And the cherry on top is the 88% Loan/Deposit ratio, which means PEBK has an immaterial amount of wholesale funding on the books.
    • Capital & Equity Positions: simply put, PEBK has excess Capital and Equity on its balance sheet, which is a lever an acquirer can pull to drive incremental earnings in its M&A model.
    • Asset Quality: Buyers unlikely to have to incorporate a material credit mark as NPL/Loans metric is 0.50% and the Loan Loss Reserves currently cover NPL’s by ~1.6x.

Some concerns that could pressure earnings/profitability/growth to keep an eye on:

  • Economic Cycle
    • Hard to forecast where we are here, but all banks and shareholders, no matter the quality of management, bear the risk of a downturn in the local and national economy.

Bank Description & Geography

Peoples Bank currently operates 19 banking offices, mainly northwest of Charlotte (Catawba, Alexander, Lincoln, Mecklenburg, & Iredell counties) and they are focused on growing its Wake county (Raleigh MSA) presence.

pebk_geo

Financial Overview

PEBK

Notable Ownership

  • Christine Abernethy – 12.1%
  • Directors / Named Executives – 11.2%
  • Tontine Financial – 7.0%
  • Jeffrey Gendell – 9.5%
  • Kennedy Capital – 3.6%
  • BlackRock – 3.5%
  • Vanguard – 3.4%

Prospective Buyers (active market a lot of potential buyers)

  • First Citizens ($36B Assets / FCNCA)
  • Fifth Third ($159B / FITB)
  • FNB Corp ($32B / FNB)
  • Pinnacle Financial ($24B / PNFP)
  • First Bancorp NC ($5.7B / FBNC)
  • Carolina Financial ($3.7B / CARO)
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ENB Financial Corp (ENBP)

I’ll put disclaimer upfront – this name is illiquid, boring, and unlikely to fit anything but a retail position size. But I like the bank so I’m going to write it up.

ENB Financial Corp (ENBP) of Ephrata, PA. ENB operates as Ephrata National Bank, and it is a small community bank that has served SE Pennsylvania (footprint is around Lancaster, PA) since 1881. Folks, ENB is as boring and straightforward as banking gets these days. Prudent and seasoned management team with a proven track record of performance positioned to compound ROE’s at ~10% while paying a 3%+ dividend.

At its current P/TBV (102%) and P/E (12.4x) valuations, an investment in ENBP at current levels positions a new shareholder alongside an excellent management team executing at a level that should compound returns, with very little fanfare, at high-single-digits levels over a complete cycle. Unlike other names mentioned on this site, I would not  assign much of a probability to an upside M&A scenario given ENBP’s mission statement (and current scholarship ownership structure; as an aside, the story of the ENBP scholarship is great: http://www.ephratareview.com/news/scholarship-strikes-gold/).

Primary drivers setting up ENBP shareholders for a nice investment over the near- and longer-term:

  1. Compounding Earnings: simply put, ENBP management is very good at operating a community bank. Given its conservative nature, I don’t think we will see ENBP print ROA’s and ROE’s much higher than the current 1% and 10% levels, respectively, but that comes with a (comforting) layer of security when the credit cycle turns as ENBP has proven, very clearly, how well they manage the balance sheet to protect income and capital. A prime example of this protection can be seen by looking back at the 2007-2009 financial crisis and ensuing credit overhang banks experienced thru 2012. ENBP reported net income each year of the financial crisis and its *worst* fiscal year performance was 2008’s 0.60% ROA and 5.9% ROE. NPL’s peaked at ~180bps in 2008 and its worst year of charge-offs saw a 0.29% NCO (that is impressive) in 2009. By 2010, ENBP had returned to a “normalized” earnings profile (again, that is impressive). With confidence in management’s ability to operate and minimize downside risks, I’ll gladly sacrifice a little upside in order to sit back and appreciate the 10% ROE.
  2. Dividend Income: ENBP pays a current dividend yield of ~3.3% and the current payout ratio is very manageable 41%.
  3. Asset Quality, Loan Mix, & Deposit Funding: all three of these continue to highlight ENBP’s stellar management. The Bank has not swayed its loan mix in decades, asset quality and loss reserving is pristine, and the deposit book is spectacular. Contributing to a Cost of Funds metric of 34bps, ENBP’s deposit book is a very valuable liability.

Some concerns that could pressure earnings/profitability/growth to keep an eye on:

  • Limited-to-zero M&A upside
    • ENBP has grown organically from its founding and its mission statement is pretty clear: “To remain an independent community bank of undisputed integrity, serving the communities of Lancaster County and beyond.”
    • That aside, the business and valuation dynamic behind ENBP shares would make it a very attractive purchase for a multitude of acquirers if they ever entertained selling.
  • Economic Cycle
    • Hard to forecast where we are here, but all banks and shareholders, no matter the quality of management, bear the risk of a downturn in the local and national economy.

Bank Description & Geography

Based in Ephrata, Pennsylvania, ENB Financial Corp is the holding company for Ephrata National Bank, a full service, independent bank serving Lancaster County and parts of Lebanon and Berks county. ENBP has grown organically, rather than through mergers and acquisitions and ENBP is one of the few financial institutions in this market geography that remains an independent community bank.

ENBP Geo

Financial Overview

ENBP.PNG

Notable Ownership

  • J Harry Hibsham Scholarship Fund – 31.3%
  • Directors / Named Executives – 2.25%

Mercantile Bank Corporation (MBWM), and a quick word on the markets

Quick market note: Yes, the market has been choppy as most prognosticators have been attributing recent weakness to multitude of items (trade/geopolitical saber-rattling, Fed policy error & corresponding flattening in yield curve, normal test/reset/pause during expansionary cycle, etc…). I’m not going to debate these items or assign points for which argument is the most convincing. What I do see, specific to banks, is there has been a resetting of expectations as bank investors begin to consider the implications of a flatter/flat/inverted yield curve and a maturing/mature economic cycle. Many banks have struggled during the second half of 2018: loan pricing remains very competitive and deposit betas have increased, resulting in NIM pressure/compression. The bank franchises I’ve highlighted have shared a common thread: each company was an attractive deposit franchise trading at an attractive market valuation (P/E, P/TBV, etc…). I’m of the opinion that vetting deposit franchises and analyzing management execution and loan growth/spreads should strip the wheat from the chaff to position one’s capital investments amongst truly attractive bank franchises. With this in mind, the recent selloff has moved some previously fully- or over-valued bank franchises back to “investable” levels.

First up: Mercantile Bank Corporation (MBWM) of Grand Rapids, MI.

The recent selloff in MBWM shares provides an attractive entry point to invest in a bank franchise nicely positioned as Michigan’s third-largest bank by deposit market share. Mercantile’s management team has grown the bank in a conservative fashion recently as all growth has been organic since its transformational merger with Firstbank Corp in 2013. While MBWM’s footprint and management team make it attractive as a standalone banking franchise, there is undeniably some upside optionality as an acquisition target.

Recent market volatility has resulted in shares selling off by ~25% from its 2018 high and ~15% since September. When looking at valuations, shares haven’t been this cheap on a Price-to-Earnings and Price-to-TBV since pre-election 2016.

Primary drivers setting up MBWM shareholders for a nice investment over the near- and longer-term:

  1. Compounding Earnings: MBWM had comfortably printed ROA’s around 95bps and ROE’s around 9% prior to the recent loosening of regulatory requirements. With the loosening of standards behind the banking system, MBWM appears to be settling in at a ~1.2% ROA and ~10.5% ROE profile and there is not a reason to think those performance levels should not be treated as comfortable baseline levels going forward.
  2. Dividend Income: MBWM pays a current dividend yield of ~3.25% and has distributed out excess earnings/capital in 2016 and 2018. The current payout ratio is a very manageable 38%; unlike some banks with dividend yields above 3%, MBWM management is not forgoing growth initiatives in order to satisfy an income-hungry shareholder base.
  3. Potential M&A Upside: MBWM has a lot of things working in its favor when it comes to marketing itself as an attractive takeout target:
    • Market & Size: Michigan (yes, Michigan) has been an attractive market in recent years as it has seen some larger in-state (Chemical buying Talmer in 2016, Independent buying TCSB in 2017) activity. MBWM is positioned nicely as a strong deposit franchise that would look appealing to both in-state buyers looking to strengthen position and out-of-state buyers looking to enter a new market.
    • Low-Cost, Stable Deposit Funding: MBWM’s funding structure is very attractive. Noninterest Deposits make up ~35% of its deposit book and, while deposit costs have increased over the past year as short-term interest rates have increased, the total interest cost of MBWM’s interest-bearing deposits totals just 0.77%. MBWM’s overall cost of funds is 0.69% as of 9/30/2018.
    • Asset Quality: Buyers unlikely to have to incorporate a material credit mark as NPL/Loans metric is 0.18% and the Loan Loss Reserves currently cover NPL’s by 1.5x.

Some concerns that could pressure earnings/profitability/growth to keep an eye on:

  • Potentially acquisitive
    • Given MBWM’s current size and the current regulatory and M&A landscape, it would not be surprising if MBWM’s management looks to do another transformational acquisition. There are several smaller community banks in Michigan that would make sense for MBWM to consider (if the price is right). Any acquisition activity carries risks, upfront with economic costs and shareholder dilution before  longer-term risks via integration and execution complications.
  • Economic Cycle
    • Hard to forecast where we are here, but all banks and shareholders, no matter the quality of management, bear the risk of a downturn in the local and national economy.

Bank Description & Geography

Based in Grand Rapids, Michigan, Mercantile Bank Corporation is the bank holding company for Mercantile Bank of Michigan. Mercantile has assets of approximately $3.3 billion and operates 47 banking offices

MBWM_geo

Financial Overview

MBWM

Notable Ownership

  • Directors / Named Executives – 3.2%
  • Banc Funds – 7.5%
  • BlackRock – 6.9%
  • Dimensional – 6.5%
  • Renaissance – 4.8%

Prospective IL-based Buyers (active market a lot of potential buyers)

  • Fifth Third ($140B Assets / FITB)
  • Huntington ($104B / HBAN)
  • Chemical Financial ($20.2B / CHFC)
  • Comerica ($72.2B / CMA)

Bank Deposits as a selling point

Quick note from an article on SNL today that confirms my priors (just being honest…), and I thought it to be worth sharing as low beta, core deposit funding is a key component I look for in the majority of my community bank investments. From SNL (emphasis mine):

“Matt Kennedy, vice president at investment bank Banks Street Partners, said in an interview that a strong deposit base has move up acquirer wish lists of late. He said lower funding costs attract more potential buyers and thus drives deal prices higher. ‘The conversations when we talk to these acquirers have centered and focused on deposits and the deposit base more over the past two or three quarters than they did previously,’ he said.

Buyers are also increasingly seeking targets with lower loan-to-deposit ratios, Kennedy said, as acquirers want to take that deposit base and use it as a funding source for future loan growth.”

Source: https://www.snl.com/interactivex/article.aspx?KPLT=7&id=46002260 ($)

BankFinancial Corporation (BFIN)

The current valuation of BankFinancial Corp (BFIN) provides an attractive entry point to invest in a bank franchise nicely positioned in an acquisitive market geography with several balance sheet and operating characteristics that should benefit BFIN as a standalone enterprise and attract takeout offers.

Management has been busy over the past three years in right-sizing the equity position via share repurchases (3,085,168 at cost of $42,494,000) and dividends ($16.5 million) since Jan 1, 2015. As a result, we are starting to see what a ‘normalized’ return on equity looks like for BFIN. Benefitting from the lower tax rate, declining equity base, and increasing net income, ROE hit 9.4% in Q2 2018 and I don’t see any reason that management cannot continue hit a ~10% ROE over the rest of the current cycle.

Primary drivers setting up BFIN shareholders for a nice investment over the near- and longer-term:

  1. Compounding Earnings: As I mentioned above, management has done a nice job of lowering the equity/capital base to a more optimal level. Given the easing regulatory and tax environment, it is entirely reasonable to expect ROE’s anywhere from 9-12% during expansionary cycles.
  2. Dividend Income: BankFinancial pays a current dividend yield of ~2.48% and has been aggressively increasing that figure over the past 3 years, likely to distribute out excess capital. The current payout ratio is nearly 50%, but with the equity/capital position no longer as offside as it was in 2014, I don’t expect management to continue ramping the dividend as aggressively as recent history suggest. That said, paying a 2% yield at a 30% payout ratio doesn’t seem unreasonable given recent performance.
  3. Potential M&A Upside: BFIN has a lot of things working in its favor when it comes to marketing itself as an attractive takeout target:
    • Market & Size: Chicago is a market share driven market. There are some very large institutions looking to scale in the area and the recent deals from Canadian Imperial (PrivateBancorp purchase) and Fifth Third (MB Financial) is going to pressure the next tier of names (some listed in prospective buyers section below) will feel need/pressure to scale up as well. BFIN, at ~$1.5B in total assets, is in a really good spot for a $5-20B bank to scoop up and integrate.
    • Low-Cost, Stable Deposit Funding: BFIN’s funding structure is very attractive. While deposit costs have increased over the past year as short-term interest rates have increased, the total interest cost of BFIN’s interest-bearing deposits totals just 0.58%.
    • Asset Quality: NPL/Loans metric is 0.18% and the NPL’s are currently 3.5x over-reserved.
    • Balance Sheet & Capital: Balance sheet is short and sweet – no funky intangibles, no messy wholesale funding, only ~$1mm of OREO, and very small securities portfolio. And as I mentioned previously, BFIN remains overcapitalized, and that is a good problem to have (as an acquirer).
    • Valuation: At 145% TBV, this is a straightforward deal to structure up as a stock transaction. Plenty of banks trading at 225%+ TBV that can make the M&A numbers work – it is immediately accretive to book value.

Some concerns that could pressure earnings/profitability/growth to keep an eye on:

  • CRE Allocation/Exposure
    • Under a prior regulatory regime, regulators set a soft limit on CRE loan concentration equal to 300% of Total Risk-Based Capital; any concentration above that threshold would bring additional regulatory scrutiny. BFIN’s current metric is ~375%, a level it has fluctuated around since FY 2011 (the majority of the CRE allocation is in the Multifamily portfolio). The CRE/Multifamily allocation is not surprising giving BFIN’s geographic footprint and targeted national markets (Austin, Denver, Dallas, & Tampa) for its Multifamily portfolio.

BFIN Multifam

Bank Description & Geography

BankFinancial Corporation is the holding company for BankFinancial, NA, a national banking association providing depository, wealth management and trust services to individuals, families and businesses through 19 full-service banking offices, located in Cook, DuPage, Lake and Will Counties, IL and also providing selected commercial loans and leases on a local, regional and national basis.

BFIN Geo

 

Financial Overview

bfin fins

Notable Ownership

  • Directors / Named Executives – 5.8%
  • ESOP / 401(k) – 8.5%
  • PL Capital Advisors – 9.4% (John Palmer is a Board Member & Standstill Agreement in place)
  • Dimensional – 8.8%
  • Blackrock – 6.7%

Prospective IL-based Buyers (active market a lot of potential buyers)

  • Fifth Third ($140B Assets / FITB)
  • Bank of Montreal ($106B / BMO)
  • Wintrust Financial ($29.4B / WTFC)
  • TCF Financial ($23.1B / TCF)
  • First Midwest ($14.8B / FMBI)
  • First Busey ($9.6B / BUSE)
  • Byline ($4.4B / BY)

Croghan Bancshares (CHBH)

Brace yourself as I introduce Croghan Bancshares (CHBH), a boring brick-and-mortar bank franchise operating in Ohio around Toledo and Sandusky with approximately $850 million total assets.

What Croghan lacks in glitz and glamour (and market liquidity…), it more than makes up for by producing superb operating profitability and delivering shareholder returns. The bank’s profitability metrics (ROA/ROE, see “Financial Overview” section) are nothing short of spectacular.

Working in favor of long-term shareholders is a nontrivial lack of market liquidity. CHBH shares trade with a very shallow volumes and, as a result, the institutional community bank investor base will likely ignore Croghan as an investable opportunity. Likely due to the liquidity issue, the current valuation of CHBH is cheap relative to peers and very compelling consider they deliver best-in-class performance. I’ll highlight the three potential drivers I see working for long-term shareholders (note: multiple expansion should not be expected to contribute forward returns given the aforementioned liquidity issue with the shares):

  1. Dividend Income: Croghan pays a current dividend yield of ~2.75% and has been diligent about boosting its per-share payment over time. The company maintains plenty of optionality in its dividend policy as the current annual dividend equates to a manageable ~30% payout ratio.
  2. Compounding Equity: any earnings not paid out as dividends are either reinvested into the growth of the franchise or simply booked as equity and allowed to grow over time for the benefit of CHBH shareholders (since year-end 2013, CHBH has grown tangible book value by ~52%). Given the easing regulatory and tax environment, it is entirely reasonable to expect ROE’s anywhere from 9-12%.
  3. Potential M&A Upside: At ~$850 million in total assets and attractive adjacent geographies, Croghan has runway to grow as a standalone bank via organic growth and smaller bolt-on acquisitions. Should management ever consider selling, there are many OH-based suitors that make a ton of sense. Given the quality of deposit funding (cost of interest-bearing deposits is just 0.43% and its deposit costs have hardly moved since 2013!), Croghan would surely garner a hefty premium from potential buyers like Civista (CIVB), First Defiance (FDEF), or United Community (UCFC).

Taking items 1. and 2. together, it shouldn’t surprise that CHBH has delivered a 13.9% annualized return (dividends reinvested) over the past 5 years. Given where we are in the economic and banking/credit cycle, I think it foolish to expect similar shareholder returns over the next 5 years. We will get a economic downturn and banks will have to operate through a credit cycle, likely beginning at some time in the next 1-3 years.

Warning aside, I’m not intelligent enough to attempt to market-time a recession and credit cycle. What I am comfortable doing is investing alongside a management team and franchise that has successfully operated through a significant liquidity and credit shock (hello 2007-2009). How did CHBH weather the financial crisis? Well, the *worst* year it had was FY 2009 when it still printed a 0.7% ROA and 5.6% ROE, not to mention its NPAs couldn’t even crack above 2.4% (as a percentage of assets). Even if you invested in CHBH right at the top in its share price (peaked in May 2007), shares have a returned 7.8% annualized from May 2007 to August 2018.

Overall, CHBH should continue to deliver steady long-term returns for its shareholders. It is a wonderfully operated banking franchise that should appeal to investors that don’t require the liquidity and can tuck it away for the long-term. And even though it currently trades a little high from a P/TBV perspective (150%), I think the superior earnings performance, low-cost deposit base, and low P/E multiple (11.5x) more than offsets the P/TBV level.

Bank Description & Geography

Croghan Bancshares, a financial holding company incorporated, owns all of the outstanding shares of The Croghan Colonial Bank, an Ohio state-chartered bank incorporated in 1888 and headquartered in Fremont, Ohio, and Croghan Risk
Management Inc., a captive insurance company, incorporated in 2016.

The Bank offers a diverse range of commercial and retail banking services through its 17 banking centers as well as one Loan Production office. Products are comprised of traditional banking services such as consumer, commercial, agricultural and real estate loans, personal and business checking accounts, savings accounts, time deposit accounts, safe deposit box services, and trust department services.

CHBH geo

Financial Overview

CHBH Perf

Prospective OH-based Buyers

  • First Financial ($13.1B Assets / FFBC)
  • First Defiance ($3.0B Assets / FDEF)
  • United Community Financial ($2.5B Assets / UCFC)
  • Civista Bancshares ($2.0B Assets / CIVB)

Middlefield Banc Corp (MBCN)

The current valuation of Middlefield Banc Corp (MBCN) provides an attractive entry point to invest alongside a premier management team operating a well-capitalized, conservative community bank with growth and takeout potential. Primary drivers that should benefit MBCN shareholders over the near- and longer-term:

  1. Earnings Power
    • Middlefield has a proven track record. Annual ROA’s have exceeded 0.85% every year since 2012 and ROE’s exceed 8.5% over the same timeframe. Both metrics should see upside due to recent tax and regulatory relief.
    • No-nonsense strategy with earnings – outside of shareholder dividend, equity and capital positions allowed to compound in order to drive long-term growth and expansion. Both Tangible Equity and Tier 1 Capital have more than doubled over the past 5 years (2012-2017).
  2. Attractive P/TBV valuation
    • 132% P/BV and 155% P/TBV provides an attractive entry point, relative to peers, in the current marketplace and leaves a M&A takeout as an upside opportunity.
  3. Tax and Regulatory easement
    • Corporate Tax Reform and continued benefit of less punitive regulatory environment will benefit the expense side of the income statement.
  4. Seasoned, Proven Management Team
    • Management team, led by Thomas Caldwell as President/CEO, has an average tenure of 14 years at the bank. Bank worked through the financial crisis with impressive asset performance (charge-offs peaked at 0.65% in 2011) and did not print a single annual loss (worst year was 2009 with a 0.36% ROA and 4.90% ROE).
  5. M&A Upside Scenario
    • Impressive franchise, nearing size/scale to entice larger OH-based acquisitive banks, reasonable P/TBV multiple for stock-based transactions. M&A scenario likely comes at a 50%+ premium to current standalone valuation.

Some concerns that could pressure earnings/profitability/growth to keep an eye on:

  1. Deposit Beta given ~100% Loan/Deposit Ratio
    • While majority of deposits are in noninterest bearing accounts (~23%) and/or lower-cost account offerings (~32% Transaction & ~36% Money Market Savings), the bank’s cost of interest-bearing deposits sits at 0.94% as of 6/30/2018. MBCN’s deposit costs never dropped below its 0.68% low in 2015, which is a relatively high figure given the rate policy backdrop at that time. With a ~100% Loan/Deposit Ratio, odds are MBCN will be more sensitive to demands from its deposit relationships should they seek higher yielding offerings; if MBCN’s deposit beta outpace peer banks, it could prevent improvement in profitability metrics and result in shareholder underperformance.
  2. CRE Concentration
    • Under a prior regulatory regime, regulators set a soft limit on CRE loan concentration equal to 300% of Total Risk-Based Capital; any concentration above that threshold would bring additional regulatory scrutiny (this threshold held up bank M&A transactions prior to 2016). MBCN’s current metric is ~350% and it has grown substantially since 2016 when it sat at 253%. Given the shift in regulatory oversight over the past 18 months, it is unlikely this become a regulatory concern. That said, the heightened growth in CRE credit risk at MBCN should not be ignored; for now, I will invest alongside a management team that has executed in these markets for multiple credit cycle but will watch for any deterioration in asset quality.

Bank Description

Middlefield Banc Corp., headquartered in Middlefield, OH, is the bank holding company of The Middlefield Banking Company with total assets of $1.2 billion at June 30, 2018. The bank operates 14 full-service banking centers and an LPL Financial brokerage office. The Company is positioned between rural and metropolitan communities surrounding the Cleveland/Akron/Youngstown and Columbus markets.

Geography

The Middlefield Banking Company operates 14 brick & mortar branch locations as well as one loan production office.

MBCN Geo

Financial Overview

MBCN Fincl.PNG

Notable Ownership

  • Directors / Named Executives – 6.97%
  • Siena Capital – 2.63%
  • Banc Funds – 2.37%
  • Stieven Capital– 2.17%

Prospective OH-based Buyers

  • Chemical Financial ($18.7B Assets / CHFC)
  • First Financial ($13.1B Assets / FFBC)
  • Park National ($7.5B Assets / PRK)
  • Peoples Bancorp ($3.9B / PEBO)
  • United Community ($2.8B / UCFC)
  • Peoples Bancorp ($3.9B / PEBO)